US Issues Safeguards against Washing Machine Imports

Write 2018-01-28

The U.S. on Monday announced safeguard measures on imports of large residential washing machines and solar cells, which will likely strike a blow to South Korean manufacturers.
President Trump officially signed an order on imposing the safeguard tariffs on Tuesday.
In response, Seoul plans to file a complaint with the World Trade Organization(WTO). Trade Minister Kim Hyun-chong revealed the plan Tuesday, calling the U.S. measures unfair.
He said that to protect national interests, South Korea will actively respond to protectionism and execute its rights guaranteed in WTO agreements.
U.S. Trade Representative Robert Lighthizer said in a statement on Monday that President Donald Trump has approved recommendations to impose safeguard tariffs on imported washing machines and solar cells and modules.
The measures include a 20 percent tariff on the first 1.2 million units of large residential washing machine imports, including those produced by Samsung Electronics and LG Electronics, and a 50 percent tariff on units exceeding the quota.
The below-quota rate goes down to 18 percent and 16 percent in the second and third years, respectively. For units exceeding the quota, the rate goes down to 45 and 40 percent.
Regarding imports of solar cells in excess of 2.5 gigawatts, the U.S. will impose a 30 percent tariff in the first year and 25 and 20 percent tariffs in the second and third year respectively.
Minister Kim, who had served on the WTO’s appellate body, stressed there is a strong chance South Korea will win the suit.
He said the latest safeguards do not satisfy the terms of activation as stated under WTO agreements which include a surge in imports, serious industrial damage and a correlation between the two factors.
He said the U.S. International Trade Commission had also ruled that Korean washing machines did not harm U.S. industries and therefore the safeguard measures violate WTO agreements.
Also regarding solar panels, the minister pointed to problems within the U.S. sector such as management woes and difficulty in competing with other energy sources.
U.S. safeguards were somewhat predicted due to President Trump's protectionist stance but the tariff rates have turned out to be higher than expected.
Solar panel makers forecast shipments to the U.S. could drop by as much as one third and are hastening steps to explore other markets.
In a separate development, South Korea has begun steps to take retaliatory measures against the U.S. for imposing unfair anti-dumping duties on Korean washing machines.
Seoul has requested that the WTO suspend tariff concessions to allow for this move. This comes after the U.S. failed to implement a ruling by the WTO's Dispute Settlement Body.
This issue coupled with the safeguard dispute is expected to intensify trade friction between the two allies.